The CBRT continues to use reserve requirements as
a monetary policy and macroprudential instrument.
By the end of 2014, the weighted average reserve
requirement ratios for Turkish lira and FX are 11
percent and 11.7 percent, respectively (Graphs 22
and 23).

To simplify the structure of reserve requirements, an
approach to directly involve items subject to reserve
requirements was adopted as of 2014 instead
of subtracting certain items from total domestic
liabilities in calculating liabilities subject to reserve
requirements. With this approach, effective as of the
calculation period of 17 January 2014, many small
items that have no direct effect on the monetary
policy and reduce the efficiency of operational
process were exempted from the scope of the
required reserve liability.

Through the ROM, not only did total reserves
register an increase, but also the effects of potential
volatilities in external financing conditions on the
economy were contained.

Considering the global market developments
and the operational procedures for reserve
requirements, the CBRT limited the type of currency
maintained within the ROM to USD, effective as of
1 August 2014.

At the beginning of 2014, in order to enhance the
efficiency of the ROM, FX reserve option coefficients
(ROC) were revised for the upper tranches. By the
end of 2014, the coefficients corresponding to the
last tranches of the FX and gold reserve options stood
at 3.2 and 2.5, respectively (Graphs 24 and 25).

Banks and financing companies use the ROM
facilities widely and consistently. As of the
maintenance period of 19 December 2014, the
utilization ratio of the FX facility became 86 percent,
and that of the gold facility reached 87 percent across
the sector. Banks can also maintain standard gold for
precious metal deposit accounts, the utilization ratio
of which is around 75 percent.

To spur balanced growth and domestic savings,
the CBRT started to remunerate required reserves
of banks and financing companies maintained in
Turkish lira, as of November 2014. The CBRT press
release dated 21 October 2014 announced that,
starting from 2015, as a way to encourage core
liabilities, financial institutions whose ratio of deposits
and equity to loans are higher than the sector
average will be remunerated at a higher rate unless
they worsen their own situation.

The leverage-based reserve requirement regulation
that aims to boost the resilience of the banking
sector to shocks by containing its indebtedness
continued to be implemented with all of its aspects
in 2014. The leverage ratio of the sector realized
around 7.8 percent as of June 2014 (Graph 26). The
data pertaining to April-June 2014 suggest that
the banking sector’s leverage ratio, having a stable
course, is well above the minimum ratio of 3 percent
set by the Basel III regulation and 4 percent set by
the CBRT for 2014. An analysis by banks reveals
that no bank is required to hold additional reserve
requirements.